Education

The Student Debt Crisis… It is for Real

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Author note- This is cross posted with permission from the original author Jason Collette. Worth thinking about in Montana as the state continues to further slash funding for higher education. You can read the original post here

Young college graduates are putting their futures on hold as they struggle under the burden of high student debt – and a weak economic recovery that has failed to provide good jobs for them. Young adults in their 20s and 30s are delaying buying houses, cars, furniture or starting families. The implications for every family, and our nation, are huge.

Student loan debt has passed $1.2 trillion, according to the Consumer Financial Protection Bureau. Such widespread indebtedness has many causes and the ramifications are pervasive – including a decline in purchasing power.

High levels of family debt also often cause an increase in other types of debt, such as credit card and medical bills, due to an already too-tight family budget. Student debt has doubled since 2007 from $10,649 to $20,326.

Many are like Dave Robson, who was carrying nearly $50,000 in loans after four years of college and another year of graduate school. As a biologist, he quickly found a job in the burgeoning biotech field. But even fully employed, getting ahead financially was difficult with the $300 month loan payment each month.

In 2007, Robson was laid off from his job at a pharmaceutical manufacturer. Finding work that paid enough to support him and his debt load proved impossible in the tough economy. After years of making payments, and working with his lender to defer payments, his balance has actually increased to over $62,000.

So how did we get here? The answer is a sordid tale in modern politics. Since 1980, the amount that states have invested in higher education has been on a steady downward slope. Only Wyoming and North Dakota have managed to marginally increase the amount of their state budget that is dedicated to higher education.

On average, the amount invested in higher education by all 50 states peaked in 1976 at $10.58 per $1,000. By 2011 the amount was down to $6.30 per $1,000 and continues to drop. Meanwhile, the cost of college tuition has exploded – greatly outpacing inflation. At state flagship universities, adjusted tuition and fee charges have increased by 247 percent. Tuition at community colleges – once considered an affordable option in reach of nearly everyone – has increased 164 percent.

Nationwide, the average one-year cost of state college is $9,000. Double that if the student needs to pay room and board. Add in books,  and one year at a state college can easily cost $20,000.  The cost can double or triple if the student goes to college in another state. These compounding forces require college students to rely on loans. Parents’ savings, scholarships, after-school and summer jobs are no longer enough to cover the cost of college.

The cost of a college education is climbing, and states are investing less, just at a time when jobs that pay a living wage are disappearing. And as many are finding, a college degree is no guarantee of a job. Not surprisingly, with fewer jobs paying a living wage, delinquencies for student loans are climbing. In the fourth quarter of 2012, 11.7 percent of student loan balances were delinquent for 90 days or more, up from 11 percent in the third quarter

The number of 25-year-olds with student debt increased to 43 percent between 2003 and 2012 – up from 25 percent.  In fact, student debt is the only form of household debt still climbing after the recession. Credit cards, mortgages, and auto loans have all begun to return to traditional levels. When young people are deep in debt, our entire national economy is at risk.  The student debt debacle may be the next bubble to burst.

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About the author

Sheena Rice

A professional rabble rouser, Sheena is a Butte girl now calling Billings home. She loves Montana, music, politics, cheap beer and dinosaurs. She hates the big banks and pants. All of her posts are done on her own time and of her own accord and are not associated with the organization that she works for.

34 Comments

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  • So why is the cost of education going up? I have a degree in history. Why am I paying more than someone getting that same degree in the 1970s? Are you telling me that there have been huge breakthroughs in the way history is taught? Because, jeez, I was down there in the crappy basement lecture halls of UM, you know, the ones with the puke-green flooring.

    Why don’t we just come out and say it – America does not want you to get an education. If you don’t already have a family with the money, sure, you can try, but you’ll become an economic slave the rest of your life. And for those employing economic slaves in low-wage service industry jobs this is great – these employees can’t quit!

    If you have the money you can climb out of the proletariat class. If not, you can go to college but it won’t make your life better, it’ll make your life worse, and it will make your community worse. After all, they can’t count on you to contribute to local businesses – you’re contributing to wherever that student loan money goes.

    The smart people don’t go to school. That list of 85 people controlling as much wealth as 3.5 billion people, how many of them do you think went to university? You might be surprised to learn it’s not as many as you may have imagined, or been led to believe.

    Look what college-educated people have done with this country. Are you happy when you turn on the news? That’s what college education gets you.

    Education used to be a good thing, and it still is if you do it yourself. But if you pay for it so you can get a piece of paper with your name on it that allows you to move up in the socio-economic structure? I’m sorry, but you’re a dolt.

    Education’s guarantee nothing but misery for millions. For the love of good, Montana’s youth, don’t go to college! You will never find a job in this state that will allow you to have a better life than your parents if you do.

    • Greg, you’ve made your point before. Going to college without a plan or goal after college that links the degree with real world prospects is a waste. You are the walking embodiment of that. Your personal business model involves writing books that don’t sell and providing “advice” to other writers like you that have no money. Just what did you expect to happen going into debt for a History degree? Going into debt is an act that should require a personal business plan. Banks require it when one wants to borrow to pursue an endeavor. Now you could go to the Bakken and get a job that would pay you about 80000 a year. You might even acquire life experiences that might provide research for an interesting book like Terry C. Johnston did when he started writing about the West. Greg, you pontificate from a high horse, perhaps it’s time to put your boots on the ground and start walking.

      • I’m glad to see you’ve visited my site, that’s pretty much my business model.

        It paid my rent this month, all of which is money coming in from outside the state.

        Yep, not easy to start a money-making business from nothing, and with no help, but I embody it.

        • Well Greg, if you were a mere one-man-band you can embody whatever ethereal internet presence that gives you a thrill. Now, bringing it back to the topic, did those sales also service your student loan debt while keeping your wife and baby housed, clothed, fed, and secure in Chicago? Weren’t you seeking assistance to keep the heat on? There is absolutely nothing wrong and much to appreciate about a liberal arts education as it rounds out a person… provided it links up with a focused plan that addresses the challenges of living. If not, change course. If you are a sailor, shout “Helms down,” duck as the main boom passes overhead, and tack.

          • I never lived in Chicago, just Montana and China. I couldn’t live off of my eBook sales alone, that’s why I do content marketing and also write eBooks for other people.

            That money helps keep the heat on, which the state won’t help since the LIEAP policies changed. I can’t even qualify for food stamps I make too much.

            Let’s see, if I were making $10.10 an hour, which is what the president wants, I’d have $404 a week or $1,616 a month.

            I for one could not live on that and I don’t know anyone else that can either. Hell, those legislators in Helena are making $1,731 a month and I doubt 95% of them could live on that if they had to.

            I find it interesting that History is such a frowned-upon major. Well, it does make you think, and we know all those business majors running our country in the ground don’t want us common folks doing that.

            Never hear much about the detriments of choosing a path in Business or Finance, even though those blokes have done a lot more harm to our country with their failed policies and procedures and their insistence that the common man carry them on their back.

            Never hear anyone complain about those becoming doctors, even though they kill a terribly high number of people each year, and if they’re good enough at their practice, get elevated to management positions where they can destroy even more lives.

            No, we want majors that are providing value, not anyone like these silly chaps:
            http://www.history.illinois.edu/undergraduate/history/

          • By the way Craig, I felt Quite safe in Chicago. the town isn’t filled with roving Bands of little terrorists and gangs walking every inch of the city. There are problem areas in every city and town in America, Proportional to Population and Job Access. The windy city is a marvelous place. I flew out to work out of the Arlington Racetrack every couple years or so… and really had a blast in Chicago.

          • Craig, I don’t agree with a lot of Greg’s original diatribe. I think it misses the point badly by using false equivalence. (Actually it uses a couple of false equivalences, which contradict each other.) Still …

            It isn’t right to attack his argument based on his life choices. That smacks of stalking, and gleefully participates in the Ad Homenem. Please, don’t pull a Norma on the guy.

            • Rob, that was not my intention. I see a young man drifting without a real plan to address his future. Confusion of avocation and gainful occupation. Our country is filled with similar young people who have treated a degree as the end zone. It’s not of course, it’s only a first down on a lifetime scoring drive. BTW, Mark wrote an excellent post touching on the education student loan topic. http://pieceofmind.wordpress.com/2014/01/29/submission-requirements/#comment-29235

              • To follow up my thoughts on this topic, I would encourage colleges and universities to require applicants to write their college essays about their futures AFTER their degrees, and how that degree will enable their next steps. Along with that essay they should prepare a personal business plan that reflects on the borrowing required to finance that degree with their futures and their abilities to live under that debt. If applicants can’t do this, then save the time, money, and effort for such time that such applicants mature to take the educational experience seriously.

              • I don’t know if it will surprise you or not, but I have read Mark’s piece. I agree that it’s one of his better.

                Based on, if nothing else, my personal experience I do0n’t find Greg to be ‘drifting’ . (That was a typo, but I’m going to leave it to entice people into speaking this comment to themselves in a Scottish brogue.) My degree is in philosophy (expect a certain person to challenge the veracity of that in 3 .. 2.. 1 …) My vocational choices were limited, and I knew that. Religious leader (though I am charming, I’m not that good an actor and I find sequined suits uncomfortable), policy advocate ( requires contacts and a passion for issue that I lacked at the time), Lawyer (as I’ve clarified, I’m not that good an actor) or professor, which was my choice. Life often intrudes. I now have a productive vocation that truly suits my education, experience and talents. I am a problem solver, and not poorly compensated for it. Where Greg is wrong is assuming that my education put me in debt for little value while the uneducated rule the planet. I couldn’t do what I do without that training in logic and philosophy, and I disregard his false equivalence. You are incorrect, Craig, in thinking that one who studies the liberal arts has little concern for earning.

                It seems to me that Greg’s business model actually works for him. I’m not amused by his pompous description of ‘getting out of the system’, but frankly it seems that he has a goal. Let’s us see where he is at our age, ‘kay? That’s the point of time that you brought up, Craig.

                • You mischaracterize my position on liberal arts. Here it is again:

                  There is absolutely nothing wrong and much to appreciate about a liberal arts education as it rounds out a person… provided it links up with a focused plan that addresses the challenges of living. If not, change course. If you are a sailor, shout “Helms down,” duck as the main boom passes overhead, and tack.

  • Greg, ignore the dipstick brothers. Allow me to quote someone that these two bugnutz have probably never heard of, Frank Lloyd Wright, the great American architect and philosopher. He would counsel otherwise, and so would I.

    “To be able to work at and for what one most wants to do well, should be gospel in our society”!

    If history is your passion, do it! I happen to think that history is probably the most important subject one can study. I never tire of reading history, and I have live a good portion of it myself. The bugntuz bros. would like everything to be new every day. Thus, the inequalities and injustices we see all around are accepted as normal by the fatassed Walmart crowd. But it wasn’t always this way. BTW, by 2050, it is reported that a full THIRD of the Murcan Bible Thumpin’ Lumpen will have diabetes as a result of obesity! Ain’t that America? Well, no, it’s not! Capitalism ain’t workin’!

    Or as Ghandi might say as he elucidated his Seven Deadly Sins:

    1. Wealth without work. (see the Kochk bros.) 2. Pleasure without conscience. (see Wall Street, the movie) 3. Knowledge without character. (the bugnuz bros.) 4. Commerce without morality. (Murca) 5. Science without humanity. (the military industrial complex) 6. Worship without sacrifice. (the Christofascists) 7. Politics without principal. (THE TEATARDS!)

    You see, you want proof of evolution? Well, the easiest way to do that is make the inbreds look like monkeys! OK, inbreds, here’s your chance to shine. WHO is the inbred Ghandi, loved and revered throughout the world? Ronnie raygun??….bwhhahahahahahaha!

    I rest my case, and I win again! You see, Greg, you’re on the right path. Don’t allow the monkeys to throw you off! Have fun with them. Think of them as dancing to the tune on your organ grinder. THEN, they make much more sense!

  • It’s worse – the debt is non-dischargeable in bankruptcy. That allows the lenders to hand out loans like candy. The students often don’t make wise choices. Bad grades don’t turn off the tap. The schools are uninhibited in raising prices.

    I am one who places high value on literature degrees – people with liberal arts degrees are interesting and have active intellectual lives. Such degrees make for a better life, but don’t produce economic rewards like engineering or business. at hat does not make them less valuable. Our most valuable professions, like teaching and nursing, pay poorly, but degrees are just as costly. What’s wrong with this picture?

    • I am STILL waiting for the inbreds to produce a list of the great fascist artists and writers. For you see, there ARE none! It just doesn’t happen. And the problem in this country is that artists must put up with the oppressive fascist state which stifles creativity. And that is pretty much the same the world over. Think Charlie Chaplin and tutu boy, Hoover. Or this guy:

      http://www.nytimes.com/2011/07/02/opinion/02hotchner.html?pagewanted=all&_r=0

      • Apparently, you have failed to read the book “Avant-Garde Fascism: The Mobilisation of Myth, Art, and Culture in France, 1909 – 1939.”

          • Geez. I just knew it. I was gonna preempt Herr Vagner, but I KNEW some dumb arse would bring him up, and you did not fail.

            • So now, craig, would you mind posting for us the nazzi Ghandi? For I really, really need to know the nazzi equivalent of Ghandi! Ronnie Raygun perhaps? John Wayne? Billy Graham? Whose life do nazzi youth hold up as a beloved role model? Oillie North?? George Bush? Help me out here. Margaret Thatchhair? Whom?

              • Or maybe the Dick, cheney! You see, you dudes are always talkin’ about the producers and takers. Well, I want to know just WHAT the dick produced?! Forty million when he left Haliburton. He must’a done a whole lotta producin’ for that amount, right? Just what WAS it he produced? I forget. Just call me slow.

  • I have to agree with Larry on this Mark. Liberal Art Classes and Degrees are probably one of the most conscious freedoms you can give a person. Without personal Innovations and freedom, how is a person happy enough to move forward? People should realize that innovation in technology companies, automobile design, medicine or food production will not come only from isolated fields in scientific and vocational disciplines. Effective vaccine delivery programs, for example, require technical expertise, but they also require cultural understanding, economic planning and ethical reasoning. that only comes from visualization to the masses…. That’s exactly where Liberal Arts becomes the bridge to explaining why Vaccines matter.

    When we call ourselves America, what do we rally behind that is a Visual cue Mark? A sign of our value system? Is it not the American flag. the statute of liberty, Apple Pie?

    Do you think more trucks are bought because of the mechanics inside alone, or an artists understanding of how Body style will allow it to carry more…. You guys crack me up every time with you limited understanding of Liberal Arts.

    • Apologies if you find this insulting or ‘bullying’, but I am truly confused by your response, Norma. Mark defended the liberal arts as valuable. His complaint is that being adept in the liberal arts isn’t compensated for the value it brings to our society. You are agreeing him about that value. So, please clarify, what is your complaint with him again?

      • I have to agree with Mark on this one Rob. Norma is not crazy and her reading comprehension is above par.

      • I agree with both Rob and myself that liberal arts are valuable and not well-compensated in our society. I think that’s what I wrote.

        My complaint is that valuable professions like teaching and nursing are underpaid, and yet they must put as much into education and incur as much debt as engineers and CPA’s. That is inequitable.

  • One of the things that concerns me so much is how many people are paying money each month to student loans instead of putting that into their local economy.

    Now, I really don’t have any idea where that money I pay online to SAF each month goes. And I will say my situation would be a lot worse if I hadn’t gotten so much free money via Pell Grants (which I dropped out of school and waited until I was 24 to get before going back).

    I know if I had that $150 to $250 each month I’d eat out a little more often, maybe buy some clothes occasionally, and a few other things. I know a lot of it would find its way back into Missoula.

    I guess I’m wondering, will that SAF money find its way back to Missoula, or even Montana? And when this is happening in all 50 states, and looks to only continue to rise, boy, I think that’s a problem.

    So what are the solutions? Just forgive all the debt? I wouldn’t go that far, but I do think we need to address the student loan debt problem so future graduates aren’t so burdened by it. I think that really takes a look at where colleges are spending their money.

    I read in the Missoulian today that UM has an operating budget of $329 million. Egstrom said most of that finds its way back to Missoula. That’s great, so is that where that SAF money is going then? Because if those student loan payments will go right into Missoula for the next however many years I’m paying them it doesn’t sound such a bad thing.

    But is that the case?

    • Credit card debt is a siren song, and people that answer it ransom their future earning potential for sake of current wants – TV’s, etc. Second mortgages and refi’s transferred the largest single saving account for most Americans, their home equity, over to banks. Student loans are a riskier bet for banks in that kids might not earn enough to service the debt. Removing risk from the equation for the banks was the object. They were Federal Guaranteed loans, and now they are non-dischargeable.

      All of this is done due to the unrestrained power of banks to lay claim to our assets and earnings, and our own inability to resist the siren song. Banks are like drug dealers except that the latter often have to spend time in jail for crimes.

      Community college, trade schools, apprenticeships (where business pays for education of the work force rather than the public) – all of this makes more sense than four-year college loans for everyone no matter aptitude.

    • think of it like a car loan, your school loan payment – you bought a car/education, the lender paid the car dealer for your car, the dealer paid the workers to build you the car. The education lender gave whatever institution you went to, money to pay for your classrooms, your teachers salaries, the grounds, etc., all the costs of attending the university. That money is spent. Now you are paying back the debt for that time, while SAF is able to continue to lend to current students who will also pay back, and so forth and so on. So yes, it does stay in the community, and adds value to the system of continuing education. We are lucky to have such an institution set up, versus the alternative: http://www.vittana.org/ These students don’t have the same access to lending that we do thanks to the government. (not that I am standing up for the exorbitant cost of education, just making the point of where the money is and how it is cycling, since the question of whether it stays in the community was raised.) It is a problem, however, that student loans take up so much debt in our society. People shouldn’t be burdened with a mortgage sized debt when they finish their education. Manageable debt, yes ok. $50k plus? No.

      • So I guess in that regard we have administrators, bankers, and other enlightened individuals (most probably without any student loan debt or in contact with anyone with debt) deciding how that money is spent in the community.

        Boy, personally I’d rather have a few thousand people deciding where they’re going to eat out tonight instead.

        Still, no one has been able to say why my dad went to Carroll College in the 70s and paid less for a private school’s semester of tuition than most people are now paying for a semester of public school tuition.

        Has the technology advanced so much, or just the greed, ignorance, incompetence, and wasteful spending of those we choose to put in charge of our public institutions?

        Because I’m not seeing a real benefit to society with all that extra college cost. I’m seeing a detriment.

        Would anyone care to explain that?

  • Congress and the President keep trying to tell us they are going to fix the $1.2 Trillion Student Loan Debt…..The only thing they are making sure of is that special interest and a select few continue to make huge profits off the back of our children and their parents When it takes $7Billion To elect the President and Congress the last election so many favors are owed the whole system has been corrupted
    http://ProjectTuitionReimbursement.com

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